Why was I refused credit?

ses6jwg

Hi all.

I recently applied for an Argos credit card as the voucher cashback scheme looked attractive. I applied on-line and was dismayed and slightly surprised to find I was refused. This was a couple of months ago.

Anyway it didn't bother me too much.

However I am going away to France next June and really could do with a credit card that allows overseas transactions without a fee (which I believe my current credit cards do charge for).

My circumstances are as follows:
21 years old, Male, Single, 1 child
Resident with parents
19.5k p.a., Local Government Officer
Over 20k in savings/ investments

Existing credit:
£1000 0% student overdraft with Natwest
£500 Student Credit Card
£250 Tesco Clubcard Credit Card

Credit History:
- Went over overdraft limit ONCE with Current Account 3 years ago HOWEVER this was refunded by Natwest as I thought the overdraft was given automatically did not know it needed requesting.
- Missed ONE payment with Tesco CC about 2 years ago. This accidental as I very rarely use it, I think my debit card didn't work when paying for petrol and I used the Tesco CC and forgot to pay it off.
- I use the Natwest CC on a regular basis and always pay it off (I was under the impression this would improve my credit history!)

I was looking at the Post Office CC as it has no charges for overseas transactions, however I am reluctant to apply and be turned down.

I did a basic credit check for £2.50 and everything was green, could not see any marks.

Could it be my parents have debts at the address which is preventing me applying?

Tesco let me have a credit card when I was a student however this was before the credit crisis.

izools

Things to check:

1. Are you registered on the electoral role and is this showing on your report?
2. How many credit searches are showing on your credit report?
3. How old is your newest account?
4. Is there anyone else's name under the "Financial Associates" section of your report?
5. Who did you get your credit report from? (Experian are most widely used by Creditors, Equifax second most - best to check both as the data can differ)

Keep us posted

TFD_2

When you say existing credit, are these facilities that you have available, or that you are using?

If you have £1750 of credit available to you, and are using it all, this would concern a lender.

If you've had student facilities, and are now only 21, I'm guessing you've not had your job for very long? This wouldn't be "THE reason", but would be a factor.

Your parents debts won't affect your ability to get credit, as there is no link.

ses6jwg

izools wrote: »

Things to check:

1. Are you registered on the electoral role and is this showing on your report?
2. How many credit searches are showing on your credit report?
3. How old is your newest account?
4. Is there anyone else's name under the "Financial Associates" section of your report?
5. Who did you get your credit report from? (Experian are most widely used by Creditors, Equifax second most - best to check both as the data can differ)

Keep us posted

Hi there.

1. Yes I am on the electoral role and it is on the report.
2. Not sure at the moment I can't find it, I think its 1 for my Mobile Phone contract
3. Newest account is Orange contract June 2009
4. No associates
5. I used Equifax Statutory Credit Report

TFD wrote: »

When you say existing credit, are these facilities that you have available, or that you are using?

If you have £1750 of credit available to you, and are using it all, this would concern a lender.

If you've had student facilities, and are now only 21, I'm guessing you've not had your job for very long? This wouldn't be "THE reason", but would be a factor.

Your parents debts won't affect your ability to get credit, as there is no link.

Yes I have £1750 + a mobile phone contract which is £25 a month which I always meet.

What I tend to do is, when I get paid, anything "in the black" gets moved into my instant access savings resetting the account to zero. I then live within my overdraft usually up to about £600, then when I get paid I do the same again.

I use the Natwest card sporadically.

I hardly use the Tesco card - though I purchased an LCD TV from Tesco so used it for the points. Now paid off and I suppose I could get rid of it if needed.

I have been in my post since June 2009.

I suppose if it was essential I could cancel both my Natwest and Tesco cards - I hardly use the Tesco and the Natwest does not have any "perks" though the rate is quite low but I pay it off anyway.

Thanks for the advice.

milliemonster

Why do you live in your overdraft and even have these small debts at all and then throw all your available money into savings?

The reason you are getting refused credit is because lenders can see that as soon as you are getting your salary you are essentially spending it even though we know you are putting this in savings, then living in your overdraft. To lenders, this looks like you are high risk, they won't know about your savings.

Also this will be costing you more in the long run, you won't be earning anywhere near enough interest on the money you have in savings compared with what you are being charged on using your overdraft and the credit cards.

You need to get back in the black with your current account and stay there, pay off the debt you currently have using some of your savings, then put a smaller amount away each month, and live within your salary rather than your overdraft, then you should find you won't have anymore trouble getting credit

RobertoMoir

I'm not sure if the state of your bank account is available to lenders, but if it is then I'd say that someone who appears to live in their overdraft every single month without fail might be a cause for concern.

izools

It might be worth getting a copy of your Experian report, as this is who Argos will have searched; there may be different data. Also some creditors consider new accounts to be a slight risk, so you may not have luck until your orange contract is atleast six months old, so from January.

Get a copy of your Experian report, and if there still isn't any adverse data, and there still aren't many previous searches, then you know the reason for being declined will be due to either looking like a risk due to high credit card balances, or looking like a high risk because of something else like not having your job long

ses6jwg

milliemonster wrote: »

Why do you live in your overdraft and even have these small debts at all and then throw all your available money into savings?

The reason you are getting refused credit is because lenders can see that as soon as you are getting your salary you are essentially spending it even though we know you are putting this in savings, then living in your overdraft. To lenders, this looks like you are high risk, they won't know about your savings.

Also this will be costing you more in the long run, you won't be earning anywhere near enough interest on the money you have in savings compared with what you are being charged on using your overdraft and the credit cards.

You need to get back in the black with your current account and stay there, pay off the debt you currently have using some of your savings, then put a smaller amount away each month, and live within your salary rather than your overdraft, then you should find you won't have anymore trouble getting credit

The overdraft is INTEREST FREE for at least another 2 years so I am not being charged ANYTHING for using it.

I live in it and then move over and above into my savings so I get the maximum possible into my savings and earning interest.

I am not being charged ANY interest whatsoever on my cards as I PAY THEM OFF IN FULL each month.

I only spend on my Tesco card if making a big purcahse from Tesco - I have used the card once in the past 6 months.

The Natwest Card I use for odds and sods e.g. buying things Online, just to build up "Paid off in full" notes on my credit history.

The only reason I use them at all is I was under the impression that by using a credit card it builds up your rating if you pay it off each month but I may have been mistaken?

Would a good start be cancelling the Tesco card as I do not really require it?

CLAPTON

looking at the Argos Credit Card website it says they are NOT accepting applicstions at moment
http://www.argos.co.uk/webapp/wcs/stores/servlet/ArgosFSCreditCardHomePageHomeView?langId=-1&storeId=10001

so maybe there is no mystery as to why you were declined


in any event continue to use both your credit cards and pay in full.. this does enhance/maintain your credit rating.

the issue of the OD is more difficult.. if it appears on your credit report showing you are always in the OD then other lenders will see this as bad money management as they won't know you have a 0% OD.

izools

Still worth getting a copy of your Experian report IMHO to see if there are any discrepancies.

Leave the Tesco card open, even if it's only used once in a blue moon it is still building more positive repayment history which is always a good thing!

BTW - Pretty sure OP is posting about the Argos Card @ 27.9% APR, not Argos Credit Card - which is a Barclaycard. He can't have been declined for the Argos Barclaycard as they aren't even accepting applications to decline

deadthings

They do report the balance on your OD, as my student OD is mentioned on my files with a balance. If you live in your OD then creditors will see this regularly and it does affect your standing. I think creditors view OD use differently to other credit forms, given that it has to be repaid on demand.

Having a reasonble OD is not bad, but forever being in it certainly looks negative.

D.